Correlation Between Telkom Indonesia and Santa Cruz

Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Santa Cruz at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Telkom Indonesia and Santa Cruz into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telkom Indonesia Tbk and Santa Cruz County, you can compare the effects of market volatilities on Telkom Indonesia and Santa Cruz and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Telkom Indonesia with a short position of Santa Cruz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Santa Cruz.

Diversification Opportunities for Telkom Indonesia and Santa Cruz

0.15

Correlation Coefficient

Telkom Indonesia  Santa Cruz

Average diversification

The 3 months correlation between Telkom and Santa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Santa Cruz County in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santa Cruz County and Telkom Indonesia is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Telkom Indonesia Tbk are associated (or correlated) with Santa Cruz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santa Cruz County has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Santa Cruz go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Santa Cruz

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Santa Cruz. In addition to that, Telkom Indonesia is 4.0 times more volatile than Santa Cruz County. It trades about -0.07 of its total potential returns per unit of risk. Santa Cruz County is currently generating about -0.16 per unit of volatility. If you would invest  4,150  in Santa Cruz County on December 27, 2024 and sell it today you would lose (235.00) from holding Santa Cruz County or give up 5.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Santa Cruz County

Telkom Indonesia Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Santa Cruz County

Risk-Adjusted Performance

Very Weak

Over the last 90 days Santa Cruz County has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Santa Cruz is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Telkom Indonesia and Santa Cruz

The main advantage of trading using opposite Telkom Indonesia and Santa Cruz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Santa Cruz can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Santa Cruz will offset losses from the drop in Santa Cruz's long position.

The idea behind Telkom Indonesia Tbk and Santa Cruz County pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.